Accounting Chapter 1
Given that Jacob's Chocolates had owner investments of $4,000; net income during the period of $10,000; and owner withdrawals of $300 calculate the ending balance in the owner's capital account: Word Bank: $13,700 $6,300 $14,300
$13,700
When recording transactions into the accounting equation, which of the following statements are correct? Word Bank: -After recording the transaction, total assets will always equal total liabilities plus owner's equity -Cash must always equal Owner's Equity -Expenses are listed on the right side of the accounting equation and will increase the owner's equity account -The accounting equation must always remain in balance
-After recording the transaction, total assets will always equal total liabilities plus owner's equity -The accounting equation must always remain in balance
The three factors that must exist for a person to commit fraud include:
-Opportunity -Pressure -Rationalization
Which of the following statements explain(s) how the accounting equation applies to businesses? Word Bank: -The equation applies to all business transactions -The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. -The relation of assets, liabilities and equity is reflected in the equation. -The equation states that Assets=Liabilities + Equity -The equation states that Revenues-Expenses=Assets
-The equation applies to all business transactions -The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners. -The equation states that Assets=Liabilities + Equity -The relation of assets, liabilities and equity is reflected in the equation.
Which of the following statements explain(s) how the accounting equation applies to businesses? Word bank: -The equation applies to all business transactions -The equation reflects the fact that, at any point in time, total revenues will always equal total liabilities and assets. -The equation states that Assets=Liabilities + Equity -The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners -The equation states that Revenues - Expenses = Assets -The relation of assets, liabilities, and equity is reflected in the equation
-The equation applies to all business transactions -The equation states that Assets=Liabilities + Equity -The equation reflects that the total of what a business owns at any point in time will equal the total of what it owes creditors and owners -The relation of assets, liabilities, and equity is reflected in the equation
What term corresponds with this term. *A business owns will always equal what it owes to creditors and owners.
Accounting equation
Why is accounting important?
Accounting information impacts us all
A resource that a business owns or coontrols
Asset
An assessment of whether financial statements follow GAAP
Audit
To record the purchase of supplies for cash; the correct entry into the accounting equation would include an increase to (equipment/supplies/cash) (BLANK 1) and a decrease to (equipment/supplies/cash) (BLANK 2)
Blank 1:supplies Blank 2:cash
Identify the correct assumption. *A business is accounted for separately from other business entities and its owner
Business entity assumption
Accounting certification include: Word bank: IFRS CPA GAAP SEC
CPA
Is it an identifying, recording, or a communicating activity. *Interpreting information from financial reports
Communicating
Is it an identifying, recording, or a communicating activity. *Preparing financial statements for creditors
Communicating
Is it an identifying, recording, or a communicating activity. *Presenting financial information
Communicating
Is it an identifying, recording, or a communicating activity. *Analyzing and interpreting reports
Communicating
Is it an identifying, recording, or a communicating activity. *Preparing financial statements
Communication
Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *AJ Company pays a business income tax and has two owners
Corporation
Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Micah and Nancy own Financial Services, which pays a business income tax. Micah and Nancy do not have personal responsibility for the debts of Financial Services.
Corporation
Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Ownership of Zander Company is divided into 1,000 shares of stock. The company pays a business income tax.
Corporation
A process of analyzing data to identify meaningful relations and trends is called:
Dataa analytics
Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The company pays workers for wages earned
Decrease in assets and decrease in equity
Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The company pays cash toward an account payable
Decrease liabilities and decrease asset
Sally Smith purchases $100 for her business and paid immediately. She would record this transaction in the accounting equation by which of the following? Word Bank: -Increase Supplies; Increase Revenues -Increase Cash; Increase Expenses -Decrease Cash; Increase Supplies -Increase Cash; Increase Supplies
Decreases cash; increase supplies
Principles that determine whether an action is right or wrong
Ethics
Classify the following business activities (events, internal transactions, or external transactions). *Happenings that affect the accounting equation
Events
Identify the correct principle. *A company records the expenses incurred to generate the revenue reported
Expense recognition principle
Are suppliers an internal or external user?
External information user
Is a customer an external or internal user?
External information user
Is the labor union an internal or external user?
External information user
Classify the following business activities (events, internal transactions, or external transactions). *Exchanges of value between two entities
External transactions
Identify if it is an internal or external user. *Creditor
External user
Identify if it is an internal or external user. *Politician
External user
Identify if it is an internal or external user. *Shareholder
External user
Identify if it is an internal or external user. *Should we buy, hold, or sell a company's stock
External user
Identify if it is an internal or external user. *Should we make a five-year loan to that business
External user
Identify if it is an internal or external user. *Which firm reports the highest sales and income
External user
A group that sets accounting principles in the United States
FASB
The organization that is primarily responsible for developing GAAP for use by all U.S. companies is the:
FASB
Generally accepted accounting principles (GAAP) wants information to have Word Bank: Faithful representation Rules Relevance Concepts
Faithful representation Relevance
Identify the correct principle. *A company reports the details behind financial statements that would impact user's decisions
Full-disclosure principle
The concepts and rules that govern financial accounting practice
Generally accepted accounting principles
Identify the correct assumption. *Presumes that the business will continue operating in the future
Going-concern assumption
The organization that is responsible for issuing International Financial Standards is the:
IASB
Is it an identifying, recording, or a communicating activity. *Acquiring knowledge of revenue transactions
Identifying
Is it an identifying, recording, or a communicating activity. *Entering a list of the sales, including the prices and quantities for the company recordkeeper
Identifying
Is it an identifying, recording, or a communicating activity. *Observing transactions and events
Identifying
The correct definition of an income states is: Word Bank: -The statement describes a business's revenues and expenses over a period of time. -The statement explains changes in equity over a period of time -The statement identifies cash inflows and outflows during a period of time. -The statement describes a company's assets, liabilities and owner's equity over a period of time.
Income Statement
The four basic finals statements are:
Income statement, statement of owner's equity, balance sheet, and statement of cash flows
Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The owner invests cash in the business
Increase asset and increases equity
Jack Pickle decided to start a small business. His initial investment was $4,000. Demonstrates how to record this transaction in the accounting
Increase cash by $4,000; Increase J. Pickle, Capital by $4,000
Tyler invests $2,000 cash to form a consulting business set up as proprietorship. This transaction will: Word bank: Increases expenses by $2,000 Increase liabilities by $2,000 Increase equity by $2,000 Decrease equity by $2,000
Increase equity by $2,000
Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The company purchases supplies for cash
Increases an asset and decreases an asset
Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The company provides services for cash
Increases an asset and increases equity
Identify the impact of each of the given transactions (increase or decrease asset, liabilities or equity). *The company purchases equipment on credit
Increases asset and increases liability
Is a marketing manager a external or internal user?
Internal information user
Is a purchasing manager a external or internal user?
Internal information user
Classify the following business activities (events, internal transactions, or external transactions). Exchanges within an entity
Internal transactions
Identify if it is an internal or external user. *Distribution manager
Internal user
Identify if it is an internal or external user. *Human resources executive
Internal user
Identify if it is an internal or external user. *Production supervisor
Internal user
Identify if it is an internal or external user. *Purchasing manager
Internal user
Identify if it is an internal or external user. *Research and development executive
Internal user
Identify if it is an internal or external user. *Should we spend additional money for redesign of our product
Internal user
Identify if it is an internal or external user. *What are the costs of our product's ingredients
Internal user
Identify if it is an internal or external user. *What are the costs of our service to customers
Internal user
Identify if it is an internal or external user. *Which inventory items are out of stock?
Internal user
Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Jeffy Auto is a separate legal entity from its owner, but it does not pay a business income tax.
Limited liability corporation (LLC)
(Blank) includes opportunities in general accounting, cost accounting and internal auditing Word Bank: Accounting-related Financial accounting Managerial accounting Taxation
Managerial accounting
The (blank) principles states that accounting information is based on actual cost.
Measurement
Identify the correct principle. *Accounting information is based on actual cost
Measurement principle
Identify the correct assumption. *Transactions and events are expressed in units of money
Monetary unit assumption
Amount a business earns in excess of all expenses and costs associated with its sales and revenues
Net income
Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Riley and Kay own Speedy Packages, a courier service. Both are personally liable for the debts of the business.
Partnership
An employee that has unpaid bills might exhibit the following fraud factor:
Pressure
The majority of accounting opportunities are in (blank) accounting Word bank: Private Public Government Not-for-profit
Private
Accounting professional who provide services to many clients
Public accountants
Is it an identifying, recording, or a communicating activity. *Keeping a log of service costs
Recording
Is it an identifying, recording, or a communicating activity. *Measuring the costs of a product
Recording
Is it an identifying, recording, or a communicating activity. *Preparing and entering a list of checks issued
Recording
Is it an identifying, recording, or a communicating activity. *Registering cash sales of products sold
Recording
Is it an identifying, recording, or a communicating activity. *Using a cash register to enter sales
Recording
Which of the statement (s) below define(s) an asset? Word bank: Resources controlled by the business An owner's claim Resources with future benefits A resource owned A creditor's claim
Resources controlled by the business Resources with future benefits A resource owned
Identify the correct principle. *Revenue is recognized when goods are provided to the customer at the amount expected to be received
Revenue recognition principle
An income statement reports a company's net income or net loss during a period. Which of the following accounts would appear on an income statement? Word Bank: -Service Revenue -Account Payable -Rent Revenue -Wages Expense -Rent Expense -Cash
Services Revenue Rent Revenue Wages Expense Rent Expense
Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *IBC Services does not have separate legal existence apart from the one person who owns its.
Sole propietorship
Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Physio Products does not pay a business income tax and has one owner. The owners has unlimited liability for business debt.
Sole propietorship
Determine if it is a sole proprietorship, partnership, corporation, or limited liability company (LLC). *Trent Company is owned by Trent Malone, who is personally liable for the company's debts.
Sole propietorship
Rules of entering transactions into the accounting equation.
The accounting equation must always remain in balance so that assets always equal the sum of liabilities and equity
On January 31, Jean Consulting Company receives a bill for that month's utilities in the amount of $500. Jean sets it aside because she does not plan to pay the bill until its due date of February 15. What effect, if any, does this events have on the company's accounting equation as of January 31? Word Bank: -The business must record this event, which would decrease cash and decrease equity on January 31. -The business must record this event, which would decrease cash and increase equity on January 31. -The business must record this event, which would increase liabilities and decrease equity on January 31. -Because the bill is set aside for payment in February, there would be no effect on the accounting equation as of January 31.
The business must record this event, which would increase liabilities and decrease equity on January 31.
Identify the correct assumption. *The life of the company can be divided into specific time periods
Time period assumption
A graphical presentation of data in understanding their significance is called date (blank)
Visualization